EPAct 179D Experts

"The least expensive kilowatt, is the one not used."

- Jacob Goldman

The EPAct Tax Aspects of Obesity Solution Companies

There is a growing focus on the national obesity epidemic. Studies show that
on a global level, 500 million people are obese. The U.S. Institute of Medicine
reported that the annual cost of obesity-related illnesses in the U.S. is over
$190 billion.

One of the financial industry’s recent products is the development of
an obesity stock investment portfolio. This portfolio includes companies that
are expected to benefit from multifaceted solutions to addressing the obesity
problem.

Companies expected to flourish in the near future from tackling obesity are
categorized into pharmaceuticals and healthcare, food, commercial weight loss,
diet management and nutrition, and sports apparel and equipment. These
categories span across a large sector of business, each category standing to
obtain large EPAct tax incentives.

Tax Opportunities

Pursuant to Energy Policy Act (EPAct) Section 179D, buildings making
qualifying energy-reducing investments in their new or existing locations can
obtain immediate tax deductions of up to $1.80 per square foot.

If the building project doesn't qualify for the maximum $1.80 per square
foot immediate tax deduction, there are tax deductions of up to $0.60 per
square foot for each of the three major building subsystems: lighting, HVAC
(heating, ventilating, and air conditioning), and the building envelope. The
building envelope is every item on the building’s exterior perimeter that
touches the outside world including roof, walls, insulation, doors, windows and
foundation.

Presented below are the EPAct tax incentives for the kinds of companies that
might be included in the obesity stock portfolio categories.

The Potential EPAct Tax Deductions Available for Energy Efficient Building
Improvements for a

Hypothetical Obesity Fund

*Total square footage is an estimate based on internet data of the average
square footage of each location.

Note: This is a hypothetical portfolio created by the authors and does not
represent any particular obesity fund.

LED Lighting/LEED Certification EPAct Tax Deductions

LEED stands for Leadership in Energy and Environmental Design and is the
renowned standard for sustainable buildings in the United States . In
conditioned (cooled) LEED buildings, air conditioning is the largest building
energy user. Conditioned LEED buildings will qualify for a LED lighting tax
deduction of $1.80 per square foot when the buildings HVAC system is very
energy efficient.

To qualify for the $1.80 LED lighting tax deduction the building must be
modeled in IRS approved software. Building owners should utilize tax engineers
who are intimately familiar with the EPAct building modeling process. An
experienced tax engineer will be able to confirm before the LED LEED building
lighting installation whether it is likely to qualify for the $1.80 LED
lighting tax deduction.

Retail Energy Efficiency

Many of the obesity stock companies properties are moving towards energy
efficiency in their facilities. GNC has installed low wattage long life LED
lighting in their company headquarters and in over 1,500 company stores.
Dick’s Sporting Goods’ 675,000 square foot headquarters is LEED
certified.

Nike retail stores are achieving energy efficiency by means of energy
management system (EMS) installation in their retail outlet locations. Of
Nike’s 200 retail locations, 170 of them are equipped with EMS. Territory
facility manager, Shawn Browning, says the goal of EMS installation is to
“Maximize savings but minimize the impact on operations and the customer
experience”. Nike’s savings goal is an average of 12% energy
savings quarterly.

The building types involved with these companies vary and include
warehouses, manufacturing facilities, distribution centers, office buildings,
fitness centers, health clubs, laboratories and retail stores. Below are the
EPAct wattage targets for each building type.

EPAct Wattage Targets

Conclusion

The obesity problem requires multiple solutions. As we trim the fat from the
global obesity epidemic, we can simultaneously trim energy costs and obtain
EPAct benefits.